A – Buying through your own name
When buying a property in France, most people choose to buy in their own name or as a couple. Depending on whether you’re buying a resale property or are purchasing a property off-plan (known as vente sur plan) the buying process, including that of the various sales contracts, can vary slightly.
What doesn’t change is the protection both the vendor and buyer are afforded by the purchase process. Largely due to the role of the French Notaires in the buying process, France has one of the most secure and transparent property purchase processes in the world.
B – Buying using an SCI (Société Civile Immobilière)
There are different types of companies that can be set up to buy and own a French property but the most commonly used is the SCI (Société Civile Immobilière). Its designation as a ‘Civile’ (civil) company means that it is non-trading and is therefore not a company in the traditional sense, one that has a commercial objective.
You can hold more than one property in an SCI and they can be second homes, investment properties and also the primary residence.
There are advantages and disadvantages to both ways of buying French property, which is why it is very important to discuss your long term plans and goals with an expert.
Whilst SCI’s are very tax efficient and offer non-residents an easy way of bequeathing assets to their children, there are some additional costs and rules when compared to buying property in your own name:
- Repairs and improvement work, as well as the running costs of the property, must be processed through the SCI with funds deposited in the company bank account by the owners.
- If you set up a new SCI at the same time as the purchase of a property then expect to pay in the order of €1,000 in additional taxes and Notary fees, although this is often mitigated in the long run.
- Set up costs are normally around €3,000 and yearly accountancy fee around €800.
C – Other purchasing structures
There are also a number of other structures which can be used to purchase a property in France. If you intend to rent your property furnished, we would recommend buying through a ‘SARL de famille’ as it is a structure that will remain tax transparent even if you receive rental returns through a furnished rental property. However, setting up a ‘SARL de famille’ can be a little bit more expensive to set up.
There are a number of other ways to structure property purchases in France in ways which will be tax efficient depending on your circumstances